Question

Under a scheme of investment, the rate of interest is 4% and the interest is compounded three monthly. What will be the amount if a man invests Rs. 2000 for 1 year under this scheme?

Answer 1

Rate of interest = 4% = 0.04
Starting amount = Rs 2000
 n = 3 months
Amount  = Starting amount * (1 + Rate of Interest)^n 
                                       = 2000 * (1+0.04)^3
                                            = 2249.728
The Amount after 3 months is Rs 2249.728

Answer 2

Answer:

The answer is 2081.21

step-by-step explanation:

Compound interest, also known as interest on accrued interest, is the practice of adding interest to the principal amount of a loan or deposit. It occurs when interest is reinvested, or added to the loaned capital rather than paid out, or when the lender is required to pay it, so that income is generated the next period on the principal balance plus any accrued interest. In business and finance, investment returns is common. In contrast to simple interest, which does not compound since past interest is not added to the principal for the current cycle, compound interest allows interest to build over time. The interest per period multiplying the number of sessions in a year yields the simple average interest rate.

$principal (P)=2000 rs$

$Rate(r)=4%$  $p.a$

$period(n)=1 year=4 three.monthly$

$Amount(A)=P(1+\frac{r}{100} )^{r}$

$A=2000rs(1+\frac{1}{100} )^{4}$

   $=2000rs*(\frac{101}{100} )^{4}$

   $=2000rs*\frac{101}{100} *\frac{101}{100} *\frac{101}{100} *\frac{101}{100}$

   $=\frac{104060401}{50000}$

   $= 2081.21$

#SPJ2